The BBC projection suggests David Cameron's Conservatives will have 306 seats. If there are 10 Unionists elected in Northern Ireland then Mr Cameron might be able to command 316 - probably still slightly too few for him to be sure of winning a Queen's Speech.

But Labour and the Lib Dems together would have 317 seats, according to the BBC figures, which even with three SDLP MPs would still leave them at 320 - again probably just a few votes short.

'Be patient'

Senior Labour figures have said that under the rules of Britain's constitution, the sitting prime minister in a hung parliament makes the first attempt at forming a ruling coalition.

Business Secretary Lord Mandelson said Mr Brown had returned to Number 10, and was going to rest and "catch his breath" adding: "We have to be patient for some time more."

"It's not possible to make definite claims or reach final conclusions about the outcome of the election because there are results still to come in," he said.

"You could say the electorate have voted for change but what they haven't done is voted decisively in favour of the Conservatives."

But shadow schools secretary Michael Gove said voters would not be "entirely happy" if Mr Brown "after a defeat like this, were to try to cling on and try to form some sort of coalition of the defeated, some sort of alliance of the dispossessed".

After winning his Witney seat with an increased majority, Mr Cameron said it was clear from the results announced that the country wanted "change" and that would require "new leadership".

Promising to put the "national interest first", Mr Cameron said he would aim to bring about "strong, stable, decisive and good government".

Despite being on course to lose 90 Labour MPs, and with the party's lowest share of the vote since 1983, Gordon Brown vowed to play his part in Britain "having a strong, stable and principled government".

After winning his Kirkcaldy and Cowdenbeath seat, Mr Brown said he wanted that government to be able to lead Britain into "sustained recovery".

Foreign Secretary David Miliband said it was "reasonable and right" that parties attempted to work together to form a government in the event of a hung parliament.

'Too early'

He told BBC News: "As far as I can see, the exit poll projection suggesting that no party would win this election is being borne out.

"If indeed no party has won an absolute majority then it seems to me perfectly reasonable and right that parties should talk to each other to see if they can find common ground to establish a strong and stable government. There's no harm in that.

"It's a good thing to do when the voters have clearly not embraced any of us and given us the absolute majority that we are all seeking."

Mr Brown's spokesman said it was "too early to say" what he would do, but sources have indicated he is ready to embark on talks aimed at piecing together a coalition.

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Gordon Brown speaks after holding his seat in Kirkcaldy and Cowdenbeath

But as he was returned as MP for Sheffield Hallam Mr Clegg - whose popularity after the live TV debates has not been reflected in votes - said: "This has obviously been a disappointing night for the Liberal Democrats."

He said they "simply hadn't achieved what we hoped" but he was "proud of the way we conducted the campaign".

Amid speculation about whether the Lib Dems would side with Labour or the Conservatives in a hung parliament, he said politicians should not "rush into making claims or taking decisions which don't stand the test of time".

But he said his party would be "guided by the values and principles on which we fought this election".

The other big story of the night has been disturbances at polling stations in some parts of the country after higher than expected turnout led to lengthy queues.

Even before Houghton and Sunderland South became the first seat to declare there were widespread reports of people being unable to vote.

There could be legal challenges from candidates who have fallen a few votes short of victory and the Electoral Commission have launched an investigation.

In Sheffield, police were called to move people on when voters staged sit-in protests after waiting hours to vote. The city's returning officer apologised but said he had to close the polls at 2200 BST.

Exit poll

A joint BBC exit poll for the BBC/ITV/Sky suggested the Conservatives would be 21 seats short of an overall majority.

ELECTION FACTS

More than 44 million people are registered to vote in 649 constituencies.

Elections are also taking place for 164 English councils.

Polling in one constituency - Thirsk and Malton - has been delayed until 27 May because of the death of one of the candidates during the campaign

Voters are also choosing mayors in Hackney, Newham, Lewisham and Watford

Most counts are taking place overnight, with 20 not due to begin until after 0900 BST on Friday.

The Conservatives would have 305 MPs, up 95 on 2005, Labour would have 255, down 94, and the Lib Dems 61, down 1. Nationalists and others would have 29, the survey suggests.

NOP and Mori surveyed 17,607 voters at 130 polling stations across the UK for the BBC/ ITV/Sky exit poll.

All exit polls have a small margin of error which could be significant in a tight election such as this one, in which the three main Westminster parties have been so close in the opinion polls. There could also be different voting patterns around the country.

The poll anticipates the Lib Dems will perform better in England than in either Scotland or Wales, but would still lose one MP on their 2005 tally.

Home Affairs spokesman Chris Huhne retained his marginal seat with an increased majority, but Evan Harris lost to the Conservative candidate by 200 votes in Oxford West and Abingdon.

One of the biggest swings of the election saw the party win a seat from Labour in an area hit by huge job losses in recent months.

Vera Baird, who was solicitor general under Gordon Brown, lost her Redcar seat after polling 13,741 votes compared with 18,955 for Lib Dem Ian Swales.

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